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The PowerShares QQQ Trust (NASDAQ:QQQ) — the exchange-traded fund that tracks the Nasdaq 100 Index — is the seventh-largest ETF in the United States, with a market cap of $31.9 billion and an average daily volume of over 40 million shares. This sort of liquidity is a huge plus for institutions that need to move big money quickly.

But for the average investor? There’s no reason for you to use the QQQ.

When QQQ first hit the market back in 1999, investors had just 30 ETFs from which to choose. At that time, the fund was the primary choice for investors looking to pick up beta. In this respect, it didn’t hurt that its first months of trading coincided with the height of the tech bubble. If you had an opinion on market direction at that time, the Q’s were the best way to get bang for your buck.

Fast-forward to 2013. Today, investors can pick from 1,445 ETFs, many of which pack a greater punch than QQQ. This may come as a surprise, but the fund has a beta of just 1.05 — meaning investors aren’t getting much more juice from the fund than they would from SPDR S&P 500 ETF (NYSE:SPY). One reason for this lockstep performance is that more than half of the fund is invested in mega-caps. In addition, two of QQQ’s top holdings are former high-growth darlings that have evolved into staid, utility-like mega-caps with limited growth prospects: Microsoft (NASDAQ:MSFT), at 7.3% of fund assets, and Intel (NASDAQ:INTC), at 3.3%.

Birds of a Feather

Investors also need to contend with the issue that even though the majority of QQQ’s portfolio is invested in the tech sector, the fund is anything but a pure play. Only 62.9% of the fund is invested in technology — the remainder of the fund is allocated among consumer discretionary (17.3%), health care (12.3%), consumer staples (3.8%), and other market segments (2.7%). This creates a lot of extra noise for those seeking exposure to the tech sector, and it makes pure-play ETFs such as SPDR Technology (NYSE:XLK) a better bet for individual investors who are trying to add tech to their portfolio.

Not least, there’s the problem of the fund’s 14% weighting in Apple (NASDAQ:AAPL). This isn’t as much of an issue now as it was just a few months ago, as Apple shares have trekked steadily downward from $705 to their current level in the $470s, reducing Apple’s weighting from its peak near 20%. A high Apple weighting isn’t unique to QQQ, as many funds — including XLK — continue to hold a large position in the stock. However, it does argue against the use of QQQ as a market proxy since so much of its performance is still dependent on the fortunes of a single company. In contrast, Apple’s weighting in SPY is now just 3.3%.

The Bottom Line

QQQ is still a titan of the ETF world, but it’s time for individual investors to question what the fund has to offer beyond its first-mover advantage. Whether you’re looking for broad market exposure, high beta, or a tech play, chances are there are better options than QQQ.